Quanex Building Products (Quanex Building Products) Intrinsic Value: DCF (Earnings Based) : $86.25 (As of Apr. 25, 2024)

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What is Quanex Building Products Intrinsic Value: DCF (Earnings Based)?

As of today (2024-04-25), Quanex Building Products's intrinsic value calculated from the Discounted Earnings model is $86.25.

Note: Discounted Earnings model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

Quanex Building Products's Predictability Rank is 3.5-Stars.

Margin of Safety (Earnings Based) using Discounted Earnings model for Quanex Building Products is 60.93%.

The historical rank and industry rank for Quanex Building Products's Intrinsic Value: DCF (Earnings Based) or its related term are showing as below:

NX' s Price-to-DCF (Earnings Based) Range Over the Past 10 Years
Min: 0.23 Med: 0.29 Max: 0.39
Current: 0.39

During the past 13 years, the highest Price-to-Intrinsic-Value-DCF (Earnings Based) Ratio of Quanex Building Products was 0.39. The lowest was 0.23. And the median was 0.29.

NX's Price-to-DCF (Earnings Based) is ranked better than
74.55% of 224 companies
in the Construction industry
Industry Median: 0.63 vs NX: 0.39

Quanex Building Products Intrinsic Value: DCF (Earnings Based) Historical Data

The historical data trend for Quanex Building Products's Intrinsic Value: DCF (Earnings Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Quanex Building Products Intrinsic Value: DCF (Earnings Based) Chart

Quanex Building Products Annual Data

Trend

Oct14

Oct15

Oct16

Oct17

Oct18

Oct19

Oct20

Oct21

Oct22

Oct23

Intrinsic Value: DCF (Earnings Based)

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71.77

83.47

82.19

Quanex Building Products Quarterly Data
	Apr19	Jul19	Oct19	Jan20	Apr20	Jul20	Oct20	Jan21	Apr21	Jul21	Oct21	Jan22	Apr22	Jul22	Oct22	Jan23	Apr23	Jul23	Oct23	Jan24
Intrinsic Value: DCF (Earnings Based)	Get a 7-Day Free Trial															82.24	77.08	83.62	82.19	94.97

Competitive Comparison of Quanex Building Products's Intrinsic Value: DCF (Earnings Based)

For the Building Products & Equipment subindustry, Quanex Building Products's Price-to-DCF (Earnings Based), along with its competitors' market caps and Price-to-DCF (Earnings Based) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Quanex Building Products's Price-to-DCF (Earnings Based) Distribution in the Construction Industry

For the Construction industry and Industrials sector, Quanex Building Products's Price-to-DCF (Earnings Based) distribution charts can be found below:

* The bar in red indicates where Quanex Building Products's Price-to-DCF (Earnings Based) falls into.

Quanex Building Products Intrinsic Value: DCF (Earnings Based) Calculation

This is the intrinsic value calculated from the Discounted Earnings model with default parameters. The calculation method is the same as Discounted Cash Flow model except earnings are used in the calculation instead of free cash flow. This is the default method of calculation with GuruFocus DCF calculator.

Usually a two-stage model is used in calculating the intrinsic value with discounted cash flow model. The first stage is called growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 11%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate and rounded up to the nearest integer. It is updated daily. The current risk-free rate is 4.65%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default. Then we added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 20%
The Growth Rate in the growth stage is initially set as the default 10-Year EPS without NRI Growth Rate. In cases where the 10-year growth rate is unavailable, it defaults to using the 5-Year EPS without NRI Growth Rate. If both the 10-year and 5-year growth rates are unavailable, the system defaults to the 3-Year EPS without NRI Growth Rate.
However, it's important to note that there is a growth rate range. If the calculated growth rate exceeds 20%, it will be capped at 20%. Conversely, if the calculated growth rate falls below 5%, it will be adjusted to 5% to maintain a reasonable range.
=> Quanex Building Products's average EPS without NRI Growth Rate in the past 5 years was 47.90%, which is no less than 20%. GuruFocus defaults => Growth Rate: 20%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. EPS without NRI: eps without nri = $2.760.
GuruFocus DCF calculator is actually a Discounted Earnings calculator, EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

Quanex Building Products's Intrinsic Value: DCF (Earnings Based) for today is calculated as:

Intrinsic Value: DCF (Earnings Based)	=	EPS without NRI	*	{[(1+g1)/(1+d)	+	(1+g1)^2/(1+d)^2	+	...	+	(1+g1)^10/(1+d)^10]
	+	(1+g1)^10/(1+d)^10	*	[(1+g2)/(1+d)	+	(1+g2)^2/(1+d)^2	+	...	+	(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.2)/(1+0.11) = 1.0810810810811
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.11) = 0.93693693693694

Intrinsic Value: DCF (Earnings Based)

EPS without NRI

{[x

x^2

...

x^10]

x^10

y^2

...

y^10]}

EPS without NRI

(1-x^10)

(1-x)

x^10

(1-y^10)

(1-y)]

2.760

31.2501

86.25

Margin of Safety % (DCF Earnings Based)	=	(Intrinsic Value: DCF (Earnings Based)	-	Current Price)	/	Intrinsic Value: DCF (Earnings Based)
	=	(86.25	-	33.70)	/	86.25
	=	60.93 %

Quanex Building Products (NYSE:NX) Intrinsic Value: DCF (Earnings Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book Value per Share, Graham Number, Median Ratio etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.

Be Aware

What you need to know about Discounted Earnings model:

1. The Discounted Earnings model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that are relatively consistent performers.
4. The Discounted Earnings model works poorly for inconsistent performers like cyclicals.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.

Quanex Building Products Intrinsic Value: DCF (Earnings Based) Related Terms

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Quanex Building Products (Quanex Building Products) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Construction » Quanex Building Products Corp (NYSE:NX) » Definitions » Intrinsic Value: DCF (Earnings Based)

Comparable Companies

Traded in Other Exchanges

4Q2:Germany

Address

945 Bunker Hill Road, Suite 900, Houston, TX, USA, 77024

Website

https://www.quanex.com

Quanex Building Products Corp is a manufacturer of components sold to original equipment manufacturers in the building products industry. It manufactures engineered products like window and door components that include flexible insulating glass spacers, extruded vinyl profiles, window and door screens, solar panel sealants and precision-formed metal and wood products among others. Its three operating segments are North American Fenestration being the key revenue driver, European Fenestration, and North American Cabinet Components. Geographically, it derives a majority of revenue from the United States.

Executives

Curtis M Stevens	director	LOUISIANA-PACIFIC CORPORATION, 414 UNION STREET, SUITE 1910, NASHVILLE TN 37219
Susan F Davis	director
William C Griffiths	director	C/O SPX CORPORATION, 13515 BALLANTYNE CORPORATE PLACE, CHARLOTTE NC 28277
Paul Cornett	officer: SVP General Counsel, Secretary	1800 W LOOP SOUTH, SUITE 1500, HOUSTON TX 77027
Karen Ettredge	officer: VP, Controller	1800 W LOOP SOUTH, SUITE 1500, HOUSTON TX 77027
Bradley E. Hughes	director	2420 BRADWAY BOULEVARD, BLOOMFIELD VILLAGE MI 48301
Jason Lippert	director	C/O LIPPERT COMPONENTS INC, 2375 TAMIAMI TRAIL NORTH STE 11, NAPLES FL 34103
George Laverne Wilson	officer: Chief Operating Officer	1800 WEST LOOP SOUTH, SUITE 1500, HOUSTON TX 77027
Kimberley Garcia	officer: VP, CHRO	1800 W LOOP SOUTH, SUITE 1500, HOUSTON TX 77027
Meredith W. Mendes	director	2901 BUTTERFIELD ROAD, OAK BROOK IL 60523
Scott M. Zuehlke	officer: VP, IR & Treasurer	1800 W LOOP SOUTH, SUITE 1500, HOUSTON TX 77027
Joseph D Rupp	director	QUANEX BUILDING PRODUCTS CORPORATION, 1800 W LOOP SOUTH, SUITE 1500, HOUSTON TX 77027
Waltz William E Jr.	director	16100 SOUTH LATHROP AVENUE, HARVEY IL 60426
Mark A Livingston	officer: VP CAO Controller	2105 CITY WEST BLVD., SUITE 500, HOUSTON TX 77042
Kevin P Delaney	officer: SVP-Gen. Counsel & Secretary	1900 WEST LOOP SOUTH SUITE 1500, HOUSTON TX 77027